It is Friday, and so we may as well get the headline out of the way. The War in Ukraine continues. We were chatting about it on the balcony this morning. Seasonal weather has affected the tempo of operations. Restricted mobility has limited things to artillery, rocket and drone strikes on Ukraine’s electrical grid. That will begin to change in a few weeks.

The little chart in the report above shows the prospects for Spring. That is a potential three-pronged Russian attack as soon as the ground hardens and their vehicles can move on soggy chill mud. As a counter to that plan, NATO countries are shipping materiel to Ukraine. That may account for a shake up in the Ukrainian government over corruption charges against serving officials. That may be a condition for the 31 American M1A1 Tanks and hundreds of Bradley combat vehicles which are said to be in motion. They will require some technical/training/maintenance support, probably provided by contractor support. Due to the chaos of combat, some of those specialists will be compromised. The first reported US casualty happened this week- an AWOL SEAL- so there will be additional complications in the continuing escalation.

There is some confusion on the consequences of the preparations for Spring operations. We saw a report claiming to read Putin’s mind. It claimed the failure to crush opposition to the invasion constitutes an existential threat to Russia. We do not have the same sense of immediacy on this side of the Atlantic. If things go badly for Russia in the Spring offensive, it brings up the possibility of escalation in the conflict. Would that mean the use- or threatened use- of the weapons of mass destruction?

We do not think this means an inter-continental exchange of missiles. Times have changed, and there are defensive systems that can now intercept ICBMs. In a new technical environment the Russian Navy has dispatched their new-construction surface warship Admiral Gorshkov to the Atlantic. The frigate is armed with the ‘Tsunami’ nuclear torpedoes. Word is they could unleash gigantic punishing waves of seawater against coastal targets. Would they start with a shot at a major America city? We think that unlikely as a first step. Would an smaller, less-inhabited island be sufficient to demonstrate capability? A ‘demonstration’ would not exactly constitute an act of war, would it?

So, that is part of the situation overseas. We have been struggling to find out what happens if this current struggle in the House transition could actually have an impact. Janet Yellen has some accounting tricks that will keep things running for a while, but she says they will run out in June.

Trying to relate consequences to the business crowd on what to expect eight or nine paydays ahead was a challenge. The best we could find was mention of Federal Pensions as one likely target. It was not specified if the target was “civil” or “military” retirement accounts, but likely both. Since some of us draw checks from Uncle Sugar, we looked for a little more detailed assessment to enable planning for when the Chairman may need to start sending lay-off notices.

If we get to a shutdown over the Ceiling, the current $6 Trillion federal budget will immediately be cut 20% to match the $4.8 Trillion in revenues collected. That measure could directly affect:

Social Security, Medicare, Medicaid, Defense, Veteran benefits, and interest cost $4.2 trillion. Exempting these programs would force immediate elimination of 2/3rds of all remaining spending. That would include:

Food stamps, child nutrition, disability benefits, refundable tax credits, infrastructure, highway aid, the NIH, the FDA, national parks, homeland security, U.S. embassies, NASA, federal prisons, K–12 education, Pell Grants, unemployment benefits, and disaster aid.

In the old days, Budget Ceiling increases used to inspire a cloak of responsibility. The House would propose measures to allegedly control the steady (and automatic) annual budget increases. The last time that occurred was back in 2011. The GOP supported three increases to the ceiling without such cost-saving addendums since then. Maybe this time, with the Debt having doubled in the last decade, some actual reform can make it into a Ceiling increase. And like ground combat in Europe, the virtue signaling likely will increase, once the mud hardens a bit.

So, we’ll see. There seems to be a fair amount going on. We will try to keep you posted!

Copyright 2023 Vic Socotra
www.vicsocotra.com